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Automotive Discussions Car People talking about the Car Business – This is the place where it happens |
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07-19-2016, 01:41 PM | #1 |
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Join Date: Jul 2016
Posts: 1
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Used car dealer in trouble
I started a used car dealership in December of 2015. I don't have time to run it myself so I hired a friend who has been a car salesman for several years. But we are currently about $60k in the hole now and I've getting really nervous that this isn't going to work. I've decided to let my friend go and have my wife run the business just to save the business. I'm also considering turning it into a BHPH since we have a very large hispanic population in the area. Figured this would increase customer base. We are a small dealership (15-20 car inventory) in a very small town of 3500 people. But we are the only used car dealer in the 15 mile radius. I really thought we wouldn't have trouble making money by now. But we are still consistently losing 5-6k per month. Part of the problem is the learning process of not buying the right cars for the market. But I feel like we have a handle on that pretty well now.
At this point I just want to get my money back out of the business and either sell it or close it down. But if there is still a way I can be successful I definitely would consider staying open. Wondering if anyone has any ideas or advice to help me out?? |
07-19-2016, 02:21 PM | #2 |
Administrator
Join Date: Nov 2007
Posts: 14,869
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Welcome to the forum and thanks for creating a new thread.
From a "housekeeping" perspective I've merged your two threads and kept this one as the active once since this section gets the most traffic. Concerning your situation, while I'm no expert, I'd be reluctant to see BHPH as a solution since my understanding is most BHPH operations are cash flow negative for the first two years. Concerning your decision on what to do with the business, obviously the best situation would be to get the business profitable and then decide if you want to remain in the business or find a buyer. While there are some entrepreneurs who will buy a business that's losing money you'll definitely be in a weak negotiation position. Concerning your losses, if I can ask, what's your monthly fixed expense? |
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